KUALA LUMPUR – The ringgit opened higher against the US dollar this morning despite the prevailing cautious sentiments surrounding China’s economic growth.
At 9.04am, the local note strengthened to 4.6100/6155 against the greenback from 4.6235/6280 at yesterday’s close.
Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid said the ringgit is anticipated to move within a tight range of around RM4.62, given the mixed signals this week.
“In China, the People’s Bank of China decided to cut the seven-day reverse repo by 10 basis points to 1.90% in order to shore up the economy.
“While we welcome the United States Federal Reserve’s (Fed) move to maintain the Fed Fund Rate, it appears that the market is in a risk-off mode as major central banks remain adamant on rate hikes to bring down inflation, while China is struggling to maintain the pace of its economic growth,” he said.
He also said the European Central Bank Governing Council raised the policy rate by 25 basis points yesterday, bringing the interest rate on marginal refinancing operation, marginal lending facility and deposit facility to 4.00%, 4.25% and 3.50%, respectively.
“The ECB remains hawkish in its monetary policy stance as the inflation rate is projected to decline towards the 2.0% target by 2025, implying that they need to maintain a restrictive stance for a while in order to ensure their price stability objective can be achieved,” said Afzanizam.
Meanwhile, ActivTrades trader Dyogenes Rodrigues Diniz said the market’s indecisiveness was due to weak macroeconomic data, noting that the US Core Retail Sales data for May failed to provide a clear direction for the market.
“From a technical point of view, if the USD/MYR manages to break below 4.6100, it could drop to as low as 4.5750 and 4.5250 in a few days,” he said.
In the meantime, the ringgit was traded lower against a basket of major currencies.
It continued to depreciate versus the British pound to 5.8939/9009 from 5.8543/8600 yesterday, fell against the Japanese yen to 3.2905/2947 from 3.2781/2816 yesterday, and dropped vis-a-vis the euro to 5.0461/0521 from 5.0151/0200 previously.
However, the local note traded mixed against other Asean currencies.
The ringgit eased against the Thai baht to 13.3141/3357 from yesterday’s 13.2783/2981 and slid against the Singapore dollar to 3.4488/4534 against 3.4442/4481 yesterday, but was higher versus the Indonesian rupiah at 308.2/308.7 from 309.1/309.6 and remained flat against the Philippines’ peso at 8.26/8.27. – Bernama, June 16, 2023
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